Feds: Medicare bilked for inhaler drugs in Fla.

MIAMI 
A scam tricked Medicare into paying for nearly 10 times more units of an inhaler drug than were available in South Florida, costing taxpayers millions, according to a federal investigation released Wednesday.

The scams over an 18-month period are the latest to be pulled off in Miami and its surrounding communities, which are the national epicenter for Medicare fraud.

According to investigators, Medicare paid for 7 million units of the drug arformoterol, even though the manufacturer and the three largest wholesalers sold only 750,000 units in the area in 2008 and the first half of 2009.

The drug is used to treat chronic bronchitis and emphysema and legitimate sales to patients should have cost about $3.7 million during that time period.

Instead, South Florida providers, mainly in Miami-Dade County, were paid $34 million, according to the report by the Department of Health and Human Services Office of Inspector General that was first obtained by The Associated Press. That's just more than half of the $62 million worth of the drug that was billed, though Medicare typically only pays for a portion of such drug costs.

Miami is responsible for roughly $3 billion of the estimated $60 billion to $90 billion a year in Medicare fraud committed nationally. The spike in arformoterol only came after authorities tried to crack down on another inhaler drug, and illustrates a constant problem plaguing investigators. As authorities have caught onto one scam, crooks have moved on to another, such as by shifting from durable medical equipment and HIV drug scams to physical therapy and home health care fraud.

The Centers for Medicare and Medicaid Services developed a system in 2008 that red-flagged claims showing whether another inhaler drug, budesonide, exceeded the maximum amount a doctor could prescribe. Sales dropped by nearly 50 percent over the next six months.

Fraudulent providers quickly realized they couldn't get as much money for that drug and began billing Medicare for arformoterol at rates exceeding the amount of drugs available.

For decades, Medicare has operated under a system that paid providers first and investigated later. That pay- and-chase method was a boon for scam artists, giving them 90 days lag time to bilk the system and flee.

In some cases, the government's attempts to mitigate fraud have actually tipped off crooks. The agency can mine data to alert possible fraud. In some cases, they send letters to providers letting them know they were overpaid, which experts say only tips off crooks that authorities are on to them. That allows the suspects to skip town with their ill-gotten gains or set up under a different name and scam.

"We are enhancing the tools and the technology we have to stay ahead of criminals and identify their patterns of behavior early, instead of waiting until a fraudulent payment is long out the door, then trying to chase it down and recover the funds," said Peter Budetti, a deputy administrator for CMS.

Under the Affordable Care Act, the agency will soon be able to view Medicare claims closer to real time and flag suspicious patterns. More stringent screening methods, including more comprehensive background checks, have also been put in place for approved Medicare providers. The agency gets roughly 18,000 applications daily to become a Medicare provider. Now the agency can put a moratorium on new applications in certain areas, such as physical therapy, if officials notice a spike in fraudulent activities.

Medicare - the federal health care insurance program for people 65 and older and for the disabled - helps pay for stays at hospitals and nursing homes as well as related health care services, such as therapy and prescriptions.

The Department of Justice has pursued offenders, setting up strike forces in Miami, Houston, Los Angeles and other hot spots netting more than 720 indictments. But officials have long said the only way to end the problem is to revamp Medicare's pay-and-chase system and stop crooks before they get into the system.

The inspector general's report recommends that Medicare officials strengthen their claim review process to focus more on prevention, including through visits to questionable providers.